T-Presentation-1 8/6/2015 1 Oregon Productivity Matrix (OPM) Supplier Briefing.

T-Presentation-1 04/19/23 1

Oregon Productivity MatrixOregon Productivity Matrix(OPM)(OPM)

Supplier BriefingSupplier Briefing


ObjectivesObjectives

At the conclusion of the training, the participant should be At the conclusion of the training, the participant should be able to:able to:

– Understand the definition of Oregon Productivity MatrixUnderstand the definition of Oregon Productivity Matrix– Understand the benefits and concept of OPMUnderstand the benefits and concept of OPM– Analyze and conduct an OPM eventAnalyze and conduct an OPM event– Define Supplier ResponsibilitiesDefine Supplier Responsibilities– Identify the value and goals of OPMIdentify the value and goals of OPM– Understand Supplier Responsibilities regarding the Understand Supplier Responsibilities regarding the

OPM webportalOPM webportal


• Is a single-page view of a supplier’s overall performance Is a single-page view of a supplier’s overall performance – schedule, quality & customer satisfaction– schedule, quality & customer satisfaction

• Non-recurring effort up frontNon-recurring effort up front

• OPM uses key metrics / statistical data employed by the OPM uses key metrics / statistical data employed by the suppliersupplier

– Often already existing company metricsOften already existing company metrics

– Referred to as Key Performance Indicators (KPIs)Referred to as Key Performance Indicators (KPIs)

• OPM provides trend-data analysis to predict OPM provides trend-data analysis to predict performanceperformance

• Can be summarized by programCan be summarized by program

Supplier’s data is not shared with any competitorsSupplier’s data is not shared with any competitors

Defining OPMDefining OPM


OPM BenefitsOPM Benefits• Outstanding managerial toolOutstanding managerial tool

• Promotes awareness at all levelsPromotes awareness at all levels

– Publish it in the work areasPublish it in the work areas

• Often uncovers problems at sub-tiersOften uncovers problems at sub-tiers

• Can be adapted to any supplier or companyCan be adapted to any supplier or company

• Identifies problems early allowing for preventive action responseIdentifies problems early allowing for preventive action response

• Summarized data in all categories shows highly visible trendsSummarized data in all categories shows highly visible trends

• Sublevel data used to define trend root causesSublevel data used to define trend root causes

• KPIs weighted based on importance and against a scale of 100%KPIs weighted based on importance and against a scale of 100%

Suppliers are not measured against one another, but against their own previous

performance

Suppliers are not measured against one another, but against their own previous

performance


Process Insight for Predicting Process Insight for Predicting Impact to LM AeroImpact to LM Aero

Design, Change Review,

Planning

Design, Change Review,

Planning

SupplierProduction

Process

SupplierProduction

ProcessInspectInspect

MRB&

C/A Fix

MRB&

C/A Fix

Scrapor

RTV

Scrapor

RTV

INPUT OUTPUT

REJECT

REJECT

ACCEPT

ACCEPT

To StockOr

Customer

To StockOr

Customer

SUPPLIER PROCESS

Validation Validation From here...From here...

OPM provides OPM provides continuous evaluationscontinuous evaluations of a of a supplier’s procurement and manufacturing supplier’s procurement and manufacturing

processes. processes.

These tools help predict impact to LM and These tools help predict impact to LM and trigger early problem solving.trigger early problem solving.

Purchase OrderIssued

Purchase OrderIssued

....to Here....to Here

FinalAcceptance

FinalAcceptance


Is OPM a Customer Report Card?Is OPM a Customer Report Card?

OPM OPM isis a report card that summarizes and grades a report card that summarizes and grades Supplier’s Line of BalanceSupplier’s Line of Balance

Line of Balance:Line of Balance:

A visual control of how production is aligned with A visual control of how production is aligned with customer demand and can:customer demand and can:

• Be used to evaluate work flow• Be a process for collecting and measuring data

against a specific plan• Expose process bottlenecks, allowing focus on

those points responsible for slippage


Line of BalanceLine of BalanceApplies to the following key areas:Applies to the following key areas:

• Material AvailabilityMaterial Availability• Measurement of receiving parts/service on time from sub-tier Measurement of receiving parts/service on time from sub-tier

suppliers, processors, or any incoming material.suppliers, processors, or any incoming material. • Manufacturing PerformanceManufacturing Performance

• Measurements of scheduled vs. actual Measurements of scheduled vs. actual • Measurements of productivityMeasurements of productivity

• Internal QualityInternal Quality • Measurement of internal performance of processes/products Measurement of internal performance of processes/products

meeting customer's requirementsmeeting customer's requirements• Customer SatisfactionCustomer Satisfaction

• Measurement of customer’s level of satisfaction with the Measurement of customer’s level of satisfaction with the provided product and/or serviceprovided product and/or service

8

88

1. Understand the Value Stream (current state reality) 2. Identify KPI’s, build OPM (may require extrapolation from data) 3. Develop Future State & Improvement Plan 4. Execute 5. Manage

Material Availability

Manufacturing Performance Internal QualityCustomer

Satisfaction

On-time from Processor

Sub-tier Quality

Sub-tier Delivery

Shortages Internal schedule detail Fab

% on-time marry-ups

Inventory Turns

Aged work in process (WIP)

On time work order release

On-time kit release

Repair Turn Time

MachineProcessCapability

Lead Time

On-time delivery

Critical Path Cycle Time

Hours per Unit

UtilizationEfficiency

First Article

First Pass Yield

Rwk Frequency

COPQ

DPMO

QARs

SQARs

Scrap Rate

Cust. Complaints

Sched. Vs, ActStart / Comp.

0

20

40

60

80

100

1s t

Qtr

2nd

Qtr

3r d

Qtr

4th

Qtr

Field Returns

Value Stream (Flow)

0

20

40

60

80

100

1s t

Qtr

2nd

Qtr

3r d

Qtr

4th

Qtr

0

20

40

60

80

100

1s t

Qtr

2nd

Qtr

3r d

Qtr

4th

Qtr

0

20

40

60

80

100

1s t

Qtr

2nd

Qtr

3r d

Qtr

4th

Qtr

LM AeroSupplier

Production Control / MRPSupplier

Sub Tier Control

Lockheed Martin Aeronautics Company

99

Material Availability

Do you use outside special processors? Do you know whether or not you receive raw material or components? Do they deliver material to the floor in kits? Is kit release on time

measurement? Who puts them together? Will you release kit short? Is material availability the trigger to start production? Do they receive material from LM? Do you receive components from internal fabrication dept.? IS it from a

sister facility? Do you inspect on receipt? Do have source inspectors at sub-tier? Is raw material or hardware receipt a problem?

Do you have material available to meet customer demand?

How do you know?How do you know?


1010

Manufacturing Performance (Line Of Balance)

Are you releasing build to package and material to meet customer demand?


Are you measuring Work In Process (WIP)? Are you measuring Shortages? Are you measuring complete/on-time Build To Package (Eng,

tools, job sequence, bill of material)? Are you measuring on time release of kits? Are you measuring on time release of Work Orders? Do you measure actual start vs. scheduled start?


1111

Manufacturing Performance (Line Of Balance)

Are you meeting your planned schedule?


Are you measuring complete/on-time Build To Package (Eng, Are you measuring WIP (aged WIP))?

Are you measuring Inventory Turns? Are you measuring Machine/Process Capability? Are you measuring Cycle times (planned vs. actual)? Are you measuring Takt time? Are you measuring kanban performance? Are you measuring hours/unit? Are you measuring productivity/realization/efficiency/utilization/std vs.

actual hrs? Are you measuring sub-assy on-time completion (% on time)?


1212

Quality

Are you measuring First Pass Yield (FPY)? What is your Cost of Poor Quality (COPQ)? What is your Scrap rate? What is your Repair hours per unit? What is your Defects Per Million Opportunities (DPMO)? Do you have SPC data? How do you measure internal defects? Do you measure process capability? Do you measure Rework frequency?

Are your internal processes capable of meeting internal customer quality requirements?



1313

Customer Satisfaction

Do you know your Repair turn around time (TAT)? Do you measure customer returns? Are you measuring customer complaints? Are you measuring response time to customer (CARS, quote)? Are you measuring Delivery/quality rating for all customers?

Are your customers satisfied?



ExamplesExamples of Key Performance Indicators of Key Performance Indicators (KPIs)(KPIs)

Material AvailabilityMaterial Availability• Sub-tier QA RatingSub-tier QA Rating• Sub-tier Delivery RatingSub-tier Delivery Rating• Shortages (including raw material)Shortages (including raw material)• On-time back from ProcessorOn-time back from Processor

Manufacturing PerformanceManufacturing Performance• Actual vs. Planned ProductionActual vs. Planned Production

– StartStart– CompletionCompletion

• Cycle TimeCycle Time• In-house detail Fab scheduleIn-house detail Fab schedule• Machine/Process CapabilityMachine/Process Capability• Lead TimeLead Time• Inventory Turns Inventory Turns • On time work order releaseOn time work order release• On-time kit releaseOn-time kit release• On-time delivery to internal customerOn-time delivery to internal customer• Aged work in process (WIP)Aged work in process (WIP)

• Hours per UnitHours per Unit• % on-time marry-ups% on-time marry-ups• Takt TimeTakt Time

Internal QualityInternal Quality• First ArticleFirst Article• Final Acceptance YieldFinal Acceptance Yield• First Pass YieldFirst Pass Yield• Rework FrequencyRework Frequency• Defects per Million OpportunitiesDefects per Million Opportunities• Production Scrap RateProduction Scrap Rate• SQARsSQARs• Site Rejections (QARs)Site Rejections (QARs)

Customer SatisfactionCustomer Satisfaction• Customer Complaints / Field Service ReturnCustomer Complaints / Field Service Return• Training Requirements FulfilledTraining Requirements Fulfilled• RTV Repair Turnaround TimeRTV Repair Turnaround Time


HowHow is PQA Going to React to the Data? is PQA Going to React to the Data?

• It is in PQA’s best interest to not over react!!!It is in PQA’s best interest to not over react!!!

– Data and charts are indicatorsData and charts are indicators

– PQA is interested in supplier acting on trendsPQA is interested in supplier acting on trends

• Individual product non-conformances will continue to be Individual product non-conformances will continue to be handled under currently established methodshandled under currently established methods

• We will provide help if poor performance causes product We will provide help if poor performance causes product level performance issueslevel performance issues

We are looking to see that the supplier is using OPM as a preventive tool and reacting to the data appropriately

We are looking to see that the supplier is using OPM as a preventive tool and reacting to the data appropriately


OPM Event MethodologyOPM Event Methodology

Typical Team composition will include Typical Team composition will include

• Supplier QASupplier QA• Supplier Program ManagementSupplier Program Management• Supplier ManufacturingSupplier Manufacturing• Supplier ContractsSupplier Contracts• LM SQE(s)LM SQE(s)• LM ProcurementLM Procurement

Typically a one toTypically a one to two day event at the supplier’s facilitytwo day event at the supplier’s facility


OPM Implementation EventOPM Implementation Event

The following activities occur as a joint PQA and Supplier TeamThe following activities occur as a joint PQA and Supplier Team

– Map the ‘typical’ manufacturing process if necessary for Map the ‘typical’ manufacturing process if necessary for KPI determinationKPI determination

– Identify metrics already collectedIdentify metrics already collected– Jointly determine KPIsJointly determine KPIs– Develop OPMDevelop OPM

– Review the selected metrics and OPM chart with Review the selected metrics and OPM chart with management for adjustment and weightingmanagement for adjustment and weighting

– Develop Bar Charts for three months past history if data Develop Bar Charts for three months past history if data availableavailable


Construction of an OPMConstruction of an OPM

StepsSteps

1.1. Identify the KPIs and their Identify the KPIs and their groupinggrouping

2.2. Establish the BaselineEstablish the Baseline

3.3. Set GoalsSet Goals

4.4. Calculate IncrementsCalculate Increments

5.5. Weight the KPIsWeight the KPIs

Master OPM Example


Identify the KPIsIdentify the KPIsThe most important step in the construction of an OPM isThe most important step in the construction of an OPM isthe identification and selection of the 5 to 10 KPIs.the identification and selection of the 5 to 10 KPIs.

• Early or predictive measures are emphasizedEarly or predictive measures are emphasized

• PQA/Supplier mutually agree on KPIsPQA/Supplier mutually agree on KPIs

• Data selection for the KPIs may come from existing Data selection for the KPIs may come from existing supplier data however the data shall provide a complete supplier data however the data shall provide a complete predictive flow and line of balance predictive flow and line of balance

• Must be quantitativeMust be quantitative

• Use of statistical data preferredUse of statistical data preferred

• Initially chosen KPIs not “locked in”Initially chosen KPIs not “locked in”

• Fewer criteria focuses energy and resources betterFewer criteria focuses energy and resources better


Categories and Grouping of KPIsCategories and Grouping of KPIsGrouping KPIs


Creating a Baseline at a Score of Creating a Baseline at a Score of 33

Average of 3 to 6 months data equals baseline performance


Setting Stretch Goal at a Score of Setting Stretch Goal at a Score of 1010

• Stretch goal is a long-term goalStretch goal is a long-term goal

– 2 to 3 years out (Not a goal to be reached within the 2 to 3 years out (Not a goal to be reached within the first quarter or this year)first quarter or this year)

• Stretch goal is to be set at a level which drives Stretch goal is to be set at a level which drives continuous improvement continuous improvement


Setting Goals at a Score of 10Setting Goals at a Score of 10Stretch Goals


Establishing the Increments Establishing the Increments (Hurdles)(Hurdles)

• Once we’ve determined where we are --- and where we are going Once we’ve determined where we are --- and where we are going (Baseline and Stretch Goal)(Baseline and Stretch Goal)

– We then establish intermediate hurdles or mini-objectives by We then establish intermediate hurdles or mini-objectives by filling in the rest of matrix from 0 to 10.filling in the rest of matrix from 0 to 10.

• Allows for 7 levels of achievement to be measured en-route to Allows for 7 levels of achievement to be measured en-route to stretch goal (focuses on improvements)stretch goal (focuses on improvements)

• Providing several declining increments allows for occasional Providing several declining increments allows for occasional underperforming periods and helps to show any inverse underperforming periods and helps to show any inverse relationships between metricsrelationships between metrics


Establishing the Increments Establishing the Increments (Hurdles)(Hurdles)

KPI Hurdles: Even increments for Scores 0 through 10 are established using the Baseline and Stretch Goal inputs. For this KPI, Supplier Quality Index, the increment between hurdles was calculated using the difference between the Stretch Goal (Score of 10) and the Baseline (Score of 3) and dividing by 7 (the number of steps between Score 3 and Score 10). Increment = (100 – 98.54) / 7 = 0.21. Therefore, each successive hurdle for this KPI is 0.21% greater than its predecessor.


Weighting the KPIsWeighting the KPIs

• Weighting based on 100% scaleWeighting based on 100% scale

• In effect, weighting defines the mission. It establishes In effect, weighting defines the mission. It establishes the importance of each KPI and has a direct impact on the importance of each KPI and has a direct impact on the score and trend.the score and trend.

• Methods for determining weightsMethods for determining weights– EmotionalEmotional– Decision matrixDecision matrix

• Critical to have upper management buy-in for weightsCritical to have upper management buy-in for weights


Weighting the KPIsWeighting the KPIsWeight


Measure Current PerformanceMeasure Current Performance

The chart is basically built and can now be used toThe chart is basically built and can now be used to

measure current months performance:measure current months performance:

• Enter current months data for each KPIEnter current months data for each KPI

• Score the dataScore the data

• Determine the value for each KPIDetermine the value for each KPI

• Determine the overall OPM valueDetermine the overall OPM value


Measure Current PerformanceMeasure Current PerformanceCurrent Month’s Performance


Score the DataScore the Data

KPI Score: The current month's performance for this KPI is 98.56%. This clears the KPI hurdle of 98.54% (Score of 3), but does not clear the KPI Hurdle of 98.75% (Score of 4). Therefore, the KPI Score for the Supplier Quality Rating metric is 3 for this reporting period.


Determine the Value for Each KPIDetermine the Value for Each KPI

KPI Value: Determined by multiplying the KPI Score by the KPI Weight input.Calculation: 3 x 3 = 9


Determine the Overall OPM ValueDetermine the Overall OPM Value

Overall Value: Calculated by summing the individual KPI Values. Calculation: 9 + 21 + 130 + 64 + 0 + 0 + 15 + 52 + 84 + 44 = 419


Trend Analysis for OPMTrend Analysis for OPM

• Bar charts provide quick visual of performance trendsBar charts provide quick visual of performance trends

• Helps focus resources on areas requiring Root Cause Analysis Helps focus resources on areas requiring Root Cause Analysis and Corrective Action and Corrective Action

• Useful for senior management reviewUseful for senior management review

• Reveals impact of functionally grouped metrics on overall Reveals impact of functionally grouped metrics on overall score, for example:score, for example:– Material AvailabilityMaterial Availability– Manufacturing PerformanceManufacturing Performance– Internal Quality Internal Quality – Customer SatisfactionCustomer Satisfaction

• Measures individual supplier trends; not a comparison toolMeasures individual supplier trends; not a comparison tool


KPI Grouping and Group ActualsKPI Grouping and Group Actuals

Metric Group Actual Total Value: This is the actual total value of all KPIs in a metric group during the reporting month. In this example the metric group Material Availability is made up of two KPIs: Supplier Quality Index and Supplier On-time Delivery. The actual total value for these KPIs is the sum of their individual calculated values. Calculation: 9 + 21 = 30

Grouping


Bar Chart for KPI GroupBar Chart for KPI Group

Metric Group Bar Charts: This bar chart plot actual values for the KPI metric groups. The third bar on the Material Availability chart represents this month's actual value of 30. The y-axis range for this bar chart should be ranged from zero to the metric group stretch goal value (100 for this metric group).


Overall OPM Bar ChartOverall OPM Bar Chart

Overall Value Bar Chart: This bar chart plots overall matrix values. The third bar on this chart represents this month's actual value of 419. The y-axis range for this bar chart should be ranged from zero to the overall stretch goal of 1000. The blue line represents the baseline score of 300.


Internal Quality-Focused OPMInternal Quality-Focused OPM• This OPM is to focus specifically Quality Performance This OPM is to focus specifically Quality Performance

Indicators and will roll-up to the high level OPM chartIndicators and will roll-up to the high level OPM chart

• Example KPIs:Example KPIs:– First ArticleFirst Article

– Final Acceptance YieldFinal Acceptance Yield

– First Pass YieldFirst Pass Yield

– Rework FrequencyRework Frequency

– Defects per Million OpportunitiesDefects per Million Opportunities

– Production Scrap RateProduction Scrap Rate

– SQARsSQARs

– Site Rejections (QARs)Site Rejections (QARs)

– Sub-tier supplier (X) QA RatingSub-tier supplier (X) QA Rating

– Cost of Poor QualityCost of Poor Quality


Top Level Internal Quality Top Level Internal Quality OPMOPM

Internal Quality Focused Internal Quality Focused Sub OPMSub OPM


Does Implementation of OPM Cost Does Implementation of OPM Cost Money?Money?

• You already use metrics to measure yourselvesYou already use metrics to measure yourselves

• Remember, existing supplier metrics are typically used to Remember, existing supplier metrics are typically used to develop summary matrixdevelop summary matrix

• OPM implementation involves a non-recurring up-front OPM implementation involves a non-recurring up-front efforteffort

– Recurring costs offset by decreased LM Aero oversightRecurring costs offset by decreased LM Aero oversight

Tailoring existing supplier metrics to OPM format is virtually cost free

Tailoring existing supplier metrics to OPM format is virtually cost free


Does OPM Provide Value?Does OPM Provide Value?

• Provides concise trend metrics data which reports performanceProvides concise trend metrics data which reports performance

• OPM can help identify small, insidious problems before they OPM can help identify small, insidious problems before they become major cost problemsbecome major cost problems

• OPM provides an effective and efficient tool for data collection OPM provides an effective and efficient tool for data collection and decision making and decision making

• Resulting process improvements can increase competitive Resulting process improvements can increase competitive edgeedge

• OPM can be used at multiple levelsOPM can be used at multiple levels

– Lower level charts roll up as a Top Management toolLower level charts roll up as a Top Management tool

Positive or negative performance in OPM metrics impact your bottom line

Positive or negative performance in OPM metrics impact your bottom line


Why should the Supplier employ Why should the Supplier employ OPM?OPM?• The evolving aerospace supply chain demands just in time methodologyThe evolving aerospace supply chain demands just in time methodology

– FlexibilityFlexibility

– Continuous flowContinuous flow

• Today’s competitive environment requires a new way of thinking and Today’s competitive environment requires a new way of thinking and managing…OPM can provide this edgemanaging…OPM can provide this edge

• OPM provides quantitative method of validating cost reduction initiatives OPM provides quantitative method of validating cost reduction initiatives and can highlight new opportunities for further improvementand can highlight new opportunities for further improvement

• Tools learned under contract requirements translate to more competitive Tools learned under contract requirements translate to more competitive bids to your other customersbids to your other customers


Supplier’s CommitmentSupplier’s Commitment• Cross functional team for a one to two day event. Cross functional team for a one to two day event.

• Facilities for the eventFacilities for the event

• Availability to existing dataAvailability to existing data

• Management commitment to attend an out briefManagement commitment to attend an out brief

• Commitment to provide monthly inputs to LM Aero by the 15Commitment to provide monthly inputs to LM Aero by the 15thth of of every month. every month.

• Commitment to review the OPM and take appropriate action. Commitment to review the OPM and take appropriate action. PrProvide comments for negative trends (a 3-month decline in OPM ovide comments for negative trends (a 3-month decline in OPM categories, a decrease in 3 or more scores in from the prior categories, a decrease in 3 or more scores in from the prior month, and KPI below baseline performance). Comments should month, and KPI below baseline performance). Comments should include, as a minimum, root cause, corrective action and a include, as a minimum, root cause, corrective action and a recovery ECD. recovery ECD.


Goals of Implementing OPMGoals of Implementing OPM

• Reducing Supplier Non-ConformancesReducing Supplier Non-Conformances• Increasing Process Stability and PredictabilityIncreasing Process Stability and Predictability• Limiting PQA End-Item Acceptance ActivityLimiting PQA End-Item Acceptance Activity

OPM is a living document that can and should be OPM is a living document that can and should be adjusted based on supplier performance, adjusted based on supplier performance, improvements, declines, process changes, improvements, declines, process changes, product additions, etc. to assure their complete product additions, etc. to assure their complete value to our customer.value to our customer.

T-Presentation-1 8/6/2015 1 Oregon Productivity Matrix (OPM) Supplier Briefing.

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Transcript of T-Presentation-1 8/6/2015 1 Oregon Productivity Matrix (OPM) Supplier Briefing.